ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Week 5 Solution
2. CheckPoint: Inventory Systems and Calculating Revenues, Expenses, and Income (Post in the Individual Forum – Due Day 5)
• Resource: Fundamental Accounting Principles, pp. 206, 208, & 209.
• Complete additional modified Exercise in Excel that is posted in the main forum for week 5. Copy and paste the Excel format and complete.
• Complete Quick Study question 5-1 on p. 205, Quick Study question 5-9 on p. 206 and Exercise 5-8 on pp. 208.
Click here for the SOLUTION
Showing posts with label solution. Show all posts
Showing posts with label solution. Show all posts
Wednesday, January 27, 2010
Sunday, January 24, 2010
*NEW* ACC 225: Week Three Solution
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Week 3 Solution
2. CheckPoint: Adjustments and Accrual and Cash Basis Accounting (Post in the Individual Forum – Due Day 5)
• Resource: Fundamental Accounting Principles, pp. 116–118 & 120
• Complete Quick Study questions 3-1 & 3-9 on pp. 116 & 117 and Exercises 3-1 & 3-7 on pp. 118 & 120.
Click here for the SOLUTION
DQ2 – Due Day 4 (Post in the Main forum in the thread I have created for DQ2)
Post must be 150-300 words.
• The Ritz Manor is a popular seaside resort. A double room costs $250 for one night. To reserve a room, guests must pay one night’s stay in advance. On each floor of the hotel, Vendalite Company operates vending machines with energy bars, juices, and other snacks for guests. Vendalite stocks the machines and collects revenue every week. Total average weekly revenue from these machines is $750. The Ritz Manor is entitled to 30% of the revenue from the machines. Vendalite sends a check to the Ritz Manor once at the end of each quarter for the resort’s share of the revenue.
o Based on this information, what are the adjusting entries Ritz Manor will need to record?
o Include in your response the amounts of the adjustments, which accounts are affected and why, and explain in detail how you determined the amounts.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Week 3 Solution
2. CheckPoint: Adjustments and Accrual and Cash Basis Accounting (Post in the Individual Forum – Due Day 5)
• Resource: Fundamental Accounting Principles, pp. 116–118 & 120
• Complete Quick Study questions 3-1 & 3-9 on pp. 116 & 117 and Exercises 3-1 & 3-7 on pp. 118 & 120.
Click here for the SOLUTION
DQ2 – Due Day 4 (Post in the Main forum in the thread I have created for DQ2)
Post must be 150-300 words.
• The Ritz Manor is a popular seaside resort. A double room costs $250 for one night. To reserve a room, guests must pay one night’s stay in advance. On each floor of the hotel, Vendalite Company operates vending machines with energy bars, juices, and other snacks for guests. Vendalite stocks the machines and collects revenue every week. Total average weekly revenue from these machines is $750. The Ritz Manor is entitled to 30% of the revenue from the machines. Vendalite sends a check to the Ritz Manor once at the end of each quarter for the resort’s share of the revenue.
o Based on this information, what are the adjusting entries Ritz Manor will need to record?
o Include in your response the amounts of the adjustments, which accounts are affected and why, and explain in detail how you determined the amounts.
Click here for the SOLUTION
Sunday, January 17, 2010
ACC 225: Week Three Solution
ACC 225
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Week 3 Solution
Discussion Question 2
• Due Date: Day 4 [Main] forum
• Post your response to the following: The Ritz Manor is a popular seaside resort. A
double room costs $220 for one night. In order to reserve a room, guests must pay one
night’s stay in advance. On each floor of the hotel, Vendalite Company operates vending
machines with energy bars, juices, and other snacks for guests. Vendalite stocks the
machines and collects revenue every week. Total average weekly revenue from these
machines is $720. The Ritz Manor is entitled to 30% of the revenue from the machines.
Vendalite sends a check to the Ritz Manor once at the end of each quarter for the resort’s
share of the revenue.
o Based on this information, what type of adjusting entries does the Ritz Manor have?
o How are the amounts of these adjustments determined?
o Which accounts are affected?
Click here for the SOLUTION
CheckPoint: Adjustments and Accrual and Cash Basis Accounting
• Resource: Fundamental Accounting Principles, pp. 116-118 and 120
• Due Date: Day 5 [Individual] forum
• Complete Quick Study questions QS 3-1 and QS 3-9 on pp. 116 and 117 and Exercises
3-1 and 3-7 on pp. 118 and 120.
• Post your answers as an attachment.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Financial Accounting
Larson, K. D., Wild, J. J., & Chiappetta B. (2005). Fundamental accounting principles (17th ed.)
ACC 225 Week 3 Solution
Discussion Question 2
• Due Date: Day 4 [Main] forum
• Post your response to the following: The Ritz Manor is a popular seaside resort. A
double room costs $220 for one night. In order to reserve a room, guests must pay one
night’s stay in advance. On each floor of the hotel, Vendalite Company operates vending
machines with energy bars, juices, and other snacks for guests. Vendalite stocks the
machines and collects revenue every week. Total average weekly revenue from these
machines is $720. The Ritz Manor is entitled to 30% of the revenue from the machines.
Vendalite sends a check to the Ritz Manor once at the end of each quarter for the resort’s
share of the revenue.
o Based on this information, what type of adjusting entries does the Ritz Manor have?
o How are the amounts of these adjustments determined?
o Which accounts are affected?
Click here for the SOLUTION
CheckPoint: Adjustments and Accrual and Cash Basis Accounting
• Resource: Fundamental Accounting Principles, pp. 116-118 and 120
• Due Date: Day 5 [Individual] forum
• Complete Quick Study questions QS 3-1 and QS 3-9 on pp. 116 and 117 and Exercises
3-1 and 3-7 on pp. 118 and 120.
• Post your answers as an attachment.
Click here for the SOLUTION
Thursday, January 14, 2010
The General's Favorite Fishing Hole - Period 2: Bob Night’s fishing camp, “The General’s Favorite Fishing Hole,” is in the second month
The General's Favorite Fishing Hole - Period 2
Click here for the SOLUTION
Looking for Period 1 (month of April)? Click here.
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition.
The General’s Favorite Fishing Hole
PERIOD 2
The General’s Favorite Fishing Hole
Bob Night’s fishing camp, “The General’s Favorite Fishing Hole,” is in the second month of operation. The camp is open from April through September, which allows for many college basketball coaches to attend during their off-season. The camp’s attendees arrive on Sunday afternoon and return home the following Saturday afternoon. Each attendee pays a registration fee that includes room and board, the use of fishing boats, and professional instruction in fishing techniques. Based on suggestions from clients, Night plans to expand the facilities and provide additional services. The post-closing trial balance as of April 30, and chart of accounts are provided below.
The General’s Favorite Fishing Hole
The following transactions took place during May 20--
The General’s Favorite Fishing Hole
May
1 In order to provide snacks for guests on a 24 hour basis, Night signed a contract with Snack Attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for $200, the estimated commission on sales for May.
2 Night purchased a surround sound system and big screen TV with a Digital Satellite System for the guest lounge. The surround sound system cost $3,600 and has an estimated useful life of 5 years, and no salvage value. The TV cost $8,000 and has an estimated useful life of 8 years, and a salvage value of $800. Night paid cash for both items.
2 Paid for May’s programming on the new Digital Satellite System, $125.
3 Night's office manager returned $100 worth of office supplies to Gordon Office Supply. Night received a $100 reduction in our account with Gordon.
3 Deposited registration fees, $52,700
3 Paid rent for lodge and campgrounds for the month of May, $40,000.
3 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.
4 Paid Gordon Office Supply on account, $400.
4 Purchased the assets of a competing business and paid cash for the following: land $100,000, lodge $530,000 and fishing boats $9,000. The lodge has a remaining useful life of 50 years and a $50,000 salvage value. The boats have remaining lives of 5 years and zero salvage value.
5 Paid May's insurance premium for the new camp, $1,000
5 Purchased food supplies from Acme Super Market on account, $22,950.
5 Purchased office supplies from Gordon Office Supplies on account, $1,200.
7 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master.
10 Deposited registration fees, $62,750
13 Paid wages to fishing guides, $30,000.
14 A guest because ill and was unable to stay for the entire week. A refund was issued in the amount of $1,000.
17 Deposited registration fees, $63,000.
19 Purchased food supplies from Acme Super Market on account, $18,400.
21 Deposited registration fees, $63,400
23 Paid $2,500 for advertising spots on National Sports Talk Radio
25 Paid repair fee for damaged boat, $ 850.
27 Paid wages to fishing guides, $30,000.
28 Paid $1,800 for advertising spots on billboards in the mid-west.
29 Purchased food supplies from Acme Super Market on account, $14,325.
30 Paid utilities bill, $3,300
30 Paid telephone bill, $1,800.
30 Paid Acme Super Market on account, $47,350.
31 Bob Night withdrew cash for personal use, $7,500.
Adjustment information at the end of May is provided below.
a. Total vending machine sales were $2,300 for the month of May.
b. Straight-line depreciation is used for the 10 boats purchased on April 2nd for $60,000. The useful life for these assets is 5 years and there is no salvage value. A full month's depreciation was taken in April on these boats.
c. Straight line depreciation is used for the 2 boats purchased in May.
d. Straight line depreciation is used to depreciate the surround sound system.
e. Straight line depreciation is used to depreciate the big screen TV.
f. Straight line depreciation is used for the building purchased in May.
g. On April 2nd Night paid $9,000 for insurance during the six-month camping season. May's portion of this premium was used up during this month.
h. Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master.
i. Office supplies remaining on hand, $150.
j. Food supplies remaining on hand, $5,925.
k. Wages earned, but not yet paid, at the end of May, $6,000.
The General’s Favorite Fishing Hole
REQUIRED
1. Enter the above transactions in a general journal. Enter transactions from May 1-4 on page 5, May 5-28 on page 6, and the remaining entries on page 7.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.)
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Prepare the income statement.
6. Prepare the statement of owner’s equity
7. Prepare the balance sheet.
8. Journalize the adjusting entries on page 8 of the general journal.
9. Post the adjusting entries to the general ledger.
10. Journalize the closing entries on page 9 of the general journal.
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.
Click here for the SOLUTION
Click here for the SOLUTION
Looking for Period 1 (month of April)? Click here.
Comprehensive Problem. Heintz and Parry. College Accounting 19th Edition.
The General’s Favorite Fishing Hole
PERIOD 2
The General’s Favorite Fishing Hole
Bob Night’s fishing camp, “The General’s Favorite Fishing Hole,” is in the second month of operation. The camp is open from April through September, which allows for many college basketball coaches to attend during their off-season. The camp’s attendees arrive on Sunday afternoon and return home the following Saturday afternoon. Each attendee pays a registration fee that includes room and board, the use of fishing boats, and professional instruction in fishing techniques. Based on suggestions from clients, Night plans to expand the facilities and provide additional services. The post-closing trial balance as of April 30, and chart of accounts are provided below.
The General’s Favorite Fishing Hole
The following transactions took place during May 20--
The General’s Favorite Fishing Hole
May
1 In order to provide snacks for guests on a 24 hour basis, Night signed a contract with Snack Attack. Snack Attack will install vending machines with food and drinks and pay a 10% commission on all sales. Estimated payments are made at the beginning of each month. Night received a check for $200, the estimated commission on sales for May.
2 Night purchased a surround sound system and big screen TV with a Digital Satellite System for the guest lounge. The surround sound system cost $3,600 and has an estimated useful life of 5 years, and no salvage value. The TV cost $8,000 and has an estimated useful life of 8 years, and a salvage value of $800. Night paid cash for both items.
2 Paid for May’s programming on the new Digital Satellite System, $125.
3 Night's office manager returned $100 worth of office supplies to Gordon Office Supply. Night received a $100 reduction in our account with Gordon.
3 Deposited registration fees, $52,700
3 Paid rent for lodge and campgrounds for the month of May, $40,000.
3 In preparation for the purchase of a nearby campground, Night invested an additional $600,000.
4 Paid Gordon Office Supply on account, $400.
4 Purchased the assets of a competing business and paid cash for the following: land $100,000, lodge $530,000 and fishing boats $9,000. The lodge has a remaining useful life of 50 years and a $50,000 salvage value. The boats have remaining lives of 5 years and zero salvage value.
5 Paid May's insurance premium for the new camp, $1,000
5 Purchased food supplies from Acme Super Market on account, $22,950.
5 Purchased office supplies from Gordon Office Supplies on account, $1,200.
7 Night paid $40 each for one-year subscriptions to Fishing Illustrated, Fishing Unlimited, and Fish Master.
10 Deposited registration fees, $62,750
13 Paid wages to fishing guides, $30,000.
14 A guest because ill and was unable to stay for the entire week. A refund was issued in the amount of $1,000.
17 Deposited registration fees, $63,000.
19 Purchased food supplies from Acme Super Market on account, $18,400.
21 Deposited registration fees, $63,400
23 Paid $2,500 for advertising spots on National Sports Talk Radio
25 Paid repair fee for damaged boat, $ 850.
27 Paid wages to fishing guides, $30,000.
28 Paid $1,800 for advertising spots on billboards in the mid-west.
29 Purchased food supplies from Acme Super Market on account, $14,325.
30 Paid utilities bill, $3,300
30 Paid telephone bill, $1,800.
30 Paid Acme Super Market on account, $47,350.
31 Bob Night withdrew cash for personal use, $7,500.
Adjustment information at the end of May is provided below.
a. Total vending machine sales were $2,300 for the month of May.
b. Straight-line depreciation is used for the 10 boats purchased on April 2nd for $60,000. The useful life for these assets is 5 years and there is no salvage value. A full month's depreciation was taken in April on these boats.
c. Straight line depreciation is used for the 2 boats purchased in May.
d. Straight line depreciation is used to depreciate the surround sound system.
e. Straight line depreciation is used to depreciate the big screen TV.
f. Straight line depreciation is used for the building purchased in May.
g. On April 2nd Night paid $9,000 for insurance during the six-month camping season. May's portion of this premium was used up during this month.
h. Night received his May issues of Fishing Illustrated, Fishing Unlimited, and Fish Master.
i. Office supplies remaining on hand, $150.
j. Food supplies remaining on hand, $5,925.
k. Wages earned, but not yet paid, at the end of May, $6,000.
The General’s Favorite Fishing Hole
REQUIRED
1. Enter the above transactions in a general journal. Enter transactions from May 1-4 on page 5, May 5-28 on page 6, and the remaining entries on page 7.
2. Post the entries to the general ledger. (If you are not using the working papers that accompany this text, you will need to enter the account titles and account numbers in the general ledger accounts.)
3. Prepare a trial balance on a work sheet.
4. Complete the work sheet.
5. Prepare the income statement.
6. Prepare the statement of owner’s equity
7. Prepare the balance sheet.
8. Journalize the adjusting entries on page 8 of the general journal.
9. Post the adjusting entries to the general ledger.
10. Journalize the closing entries on page 9 of the general journal.
11. Post the closing entries to the general ledger.
12. Prepare a post-closing trial balance.
Click here for the SOLUTION
Saturday, October 17, 2009
FIN 200: Week Nine Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 9 Solution
Assignment: Present Value, Future Value, and Annuity Due
3. You will receive $5,000 three years from now. The discount rate is 8 percent.
a. What is the value of your investment two years from now? Multiply
$5,000 .926 (one year’s discount rate at 8 percent).
b. What is the value of your investment one year from now? Multiply your
answer to part a by .926 (one year’s discount rate at 8 percent).
c. What is the value of your investment today? Multiply your answer to part b
by .926 (one year’s discount rate at 8 percent).
d. Confirm that your answer to part c is correct by going to Appendix B (present
value of $1) for n 3 and i 8 percent. Multiply this tabular value by
$5,000 and compare your answer to part c. There may be a slight difference
due to rounding.
4. If you invest $9,000 today, how much will you have:
a. In 2 years at 9 percent?
b. In 7 years at 12 percent?
c. In 25 years at 14 percent?
d. In 25 years at 14 percent (compounded semiannually)?
5. Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is
discounted at 12 percent, which should you choose?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 9 Solution
Assignment: Present Value, Future Value, and Annuity Due
- Resource: Ch. 9 of Foundations of Financial Management
- Due Date: Day 5 [Individual forum]
- Complete Problems 3, 4, and 5 on pp. 278-279.
- Post as an attachment.
3. You will receive $5,000 three years from now. The discount rate is 8 percent.
a. What is the value of your investment two years from now? Multiply
$5,000 .926 (one year’s discount rate at 8 percent).
b. What is the value of your investment one year from now? Multiply your
answer to part a by .926 (one year’s discount rate at 8 percent).
c. What is the value of your investment today? Multiply your answer to part b
by .926 (one year’s discount rate at 8 percent).
d. Confirm that your answer to part c is correct by going to Appendix B (present
value of $1) for n 3 and i 8 percent. Multiply this tabular value by
$5,000 and compare your answer to part c. There may be a slight difference
due to rounding.
4. If you invest $9,000 today, how much will you have:
a. In 2 years at 9 percent?
b. In 7 years at 12 percent?
c. In 25 years at 14 percent?
d. In 25 years at 14 percent (compounded semiannually)?
5. Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is
discounted at 12 percent, which should you choose?
Click here for the SOLUTION
FIN 200: Week Eight Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 8 Solution
CheckPoint: Time Value of Money
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 8 Solution
CheckPoint: Time Value of Money
- Resource: Ch. 7 of Foundations of Financial Management
- Due Date: Day 5 [Individual forum]
- Write a 200- to 300-word description of the four time value of money concepts: present value, present value of an annuity, future value, and future value of annuity. Describe the characteristics of each concept and give an example of when each would be used.
FIN 200: Week Seven Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 7 Solution
CheckPoint: Loan Scenario
Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The
small chemical company needs to borrow $500,000.
The bank offers a rate of 8¼ percent with a 20 percent compensating balance
requirement, or as an alternative, 9¾ percent with additional fees of $5,500 to cover
services the bank is providing. In either case the rate on the loan is floating (changes as
the prime interest rate changes), and the loan would be for one year.
a. Which loan carries the lower effective rate? Consider fees to be the equivalent of
other interest.
b. If the loan with a 20 percent compensating balance requirement were to be paid
off in 12 monthly payments, what would the effective rate be? (Principal equals
amount borrowed minus the compensating balance.)
c. Assume the proceeds from the loan with the compensating balance requirement
will be used to take cash discounts. Disregard part b about installment payments
and use the loan cost from part a.
If the terms of the cash discount are 1.5/10, net 50, should the firm borrow the funds
to take the discount?
d. Assume the firm actually takes 80 days to pay its bills and would continue to
do so in the future if it did not take the cash discount. Should it take the cash
discount?
e. Because the interest rate on the loans is floating, it can go up as interest rates go
up. Assume that the prime rate goes up by 2 percent and the quoted rate on the
loan goes up the same amount. What would then be the effective rate on the loan
with compensating balances? Convert the interest to dollars as the first step in
your calculation.
f. In order to hedge against the possible rate increase described in part e, Midland
decides to hedge its position in the futures market. Assume it sells $500,000
worth of 12-month futures contracts on Treasury bonds. One year later, interest
rates go up 2 percent across the board and the Treasury bond futures have gone
down to $488,000. Has the firm effectively hedged the 2 percent increase in
interest rates on the bank loan as described in part e? Determine the answer in
dollar amounts.
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 7 Solution
CheckPoint: Loan Scenario
- Resource: Ch. 8 of Foundations of Financial Management
- Due Date: Day 7 [post to the Individual forum]
- Complete the Comprehensive Problem: Midland Chemical Co. on pp. 250-251.
- Post the assignment as an attachment.
Midland Chemical Co. is negotiating a loan from Manhattan Bank and Trust. The
small chemical company needs to borrow $500,000.
The bank offers a rate of 8¼ percent with a 20 percent compensating balance
requirement, or as an alternative, 9¾ percent with additional fees of $5,500 to cover
services the bank is providing. In either case the rate on the loan is floating (changes as
the prime interest rate changes), and the loan would be for one year.
a. Which loan carries the lower effective rate? Consider fees to be the equivalent of
other interest.
b. If the loan with a 20 percent compensating balance requirement were to be paid
off in 12 monthly payments, what would the effective rate be? (Principal equals
amount borrowed minus the compensating balance.)
c. Assume the proceeds from the loan with the compensating balance requirement
will be used to take cash discounts. Disregard part b about installment payments
and use the loan cost from part a.
If the terms of the cash discount are 1.5/10, net 50, should the firm borrow the funds
to take the discount?
d. Assume the firm actually takes 80 days to pay its bills and would continue to
do so in the future if it did not take the cash discount. Should it take the cash
discount?
e. Because the interest rate on the loans is floating, it can go up as interest rates go
up. Assume that the prime rate goes up by 2 percent and the quoted rate on the
loan goes up the same amount. What would then be the effective rate on the loan
with compensating balances? Convert the interest to dollars as the first step in
your calculation.
f. In order to hedge against the possible rate increase described in part e, Midland
decides to hedge its position in the futures market. Assume it sells $500,000
worth of 12-month futures contracts on Treasury bonds. One year later, interest
rates go up 2 percent across the board and the Treasury bond futures have gone
down to $488,000. Has the firm effectively hedged the 2 percent increase in
interest rates on the bank loan as described in part e? Determine the answer in
dollar amounts.
Click here for the SOLUTION
FIN 200: Week Six Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 6 Solution
CheckPoint: Credit Policy Decisions
Collins Office Supplies is considering a more liberal credit policy to increase
sales, but expects that 9 percent of the new accounts will be uncollectible. Collection
costs are 5 percent of new sales, production and selling costs are 78 percent,
and accounts receivable turnover is five times. Assume income taxes of
30 percent and an increase in sales of $80,000. No other asset buildup will be
required to service the new accounts.
a. What is the level of accounts receivable needed to support this sales
expansion?
b. What would be Collins’s incremental aftertax return on investment?
c. Should Collins liberalize credit if a 15 percent aftertax return on investment
is required?
Assume Collins also needs to increase its level of inventory to support
new sales and that inventory turnover is four times.
d. What would be the total incremental investment in accounts receivable and
inventory to support an $80,000 increase in sales?
e. Given the income determined in part b and the investment determined in
part d, should Collins extend more liberal credit terms?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 6 Solution
CheckPoint: Credit Policy Decisions
- Resource: Ch. 7 of Foundations of Financial Management
- Due Date: Day 5 [Individual forum]
- Complete Problem 17 on p. 220.
Collins Office Supplies is considering a more liberal credit policy to increase
sales, but expects that 9 percent of the new accounts will be uncollectible. Collection
costs are 5 percent of new sales, production and selling costs are 78 percent,
and accounts receivable turnover is five times. Assume income taxes of
30 percent and an increase in sales of $80,000. No other asset buildup will be
required to service the new accounts.
a. What is the level of accounts receivable needed to support this sales
expansion?
b. What would be Collins’s incremental aftertax return on investment?
c. Should Collins liberalize credit if a 15 percent aftertax return on investment
is required?
Assume Collins also needs to increase its level of inventory to support
new sales and that inventory turnover is four times.
d. What would be the total incremental investment in accounts receivable and
inventory to support an $80,000 increase in sales?
e. Given the income determined in part b and the investment determined in
part d, should Collins extend more liberal credit terms?
Click here for the SOLUTION
FIN 200: Week Five Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 5 Solution
Assignment: Alternative Financing Plans
Resource: Ch. 6 of Foundations of Financial Management
Due Date: Day 7 [post to the Individual forum]
Complete Problem 14 on p. 184.
Post the assignment as an attachment.
Click here for the SOLUTION
Lear, Inc. has $800,000 in current assets, $350,000 of which are considered permanent current assets. In addition, the firm has $600,000 invested in fixed assets.
a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 10 percent. Short-term financing currently costs 5 percent. Lear’s earnings before interest and taxes are $200,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent.
b. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $200,000. What will be Lear’s earnings after taxes? The tax rate is 30 percent.
c. What are some of the risks and cost considerations associated with each of these alternative financing strategies?
Click here for the SOLUTION
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 5 Solution
Assignment: Alternative Financing Plans
Resource: Ch. 6 of Foundations of Financial Management
Due Date: Day 7 [post to the Individual forum]
Complete Problem 14 on p. 184.
Post the assignment as an attachment.
Click here for the SOLUTION
Lear, Inc. has $800,000 in current assets, $350,000 of which are considered permanent current assets. In addition, the firm has $600,000 invested in fixed assets.
a. Lear wishes to finance all fixed assets and half of its permanent current assets with long-term financing costing 10 percent. Short-term financing currently costs 5 percent. Lear’s earnings before interest and taxes are $200,000. Determine Lear’s earnings after taxes under this financing plan. The tax rate is 30 percent.
b. As an alternative, Lear might wish to finance all fixed assets and permanent current assets plus half of its temporary current assets with long-term financing. The same interest rates apply as in part a. Earnings before interest and taxes will be $200,000. What will be Lear’s earnings after taxes? The tax rate is 30 percent.
c. What are some of the risks and cost considerations associated with each of these alternative financing strategies?
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FIN 200: Week Three Solution
FIN 200
Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 3 Solution
Assignment: Pro Forma Statements
The Landis Corporation had 2008 sales of $100 million. The balance sheet items that
vary directly with sales and the profit margin are as follows:
Chapter 4 Financial Forecasting
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 15
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Net fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . 40
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 15
Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Profit margin after taxes . . . . . . . . . . . . . . . . . . 6%
.com/bhd13e
The dividend payout rate is 50 percent of earnings, and the balance in retained earnings
at the end of 2008 was $33 million. Common stock and the company’s long-term
bonds are constant at $10 million and $5 million, respectively. Notes payable are currently
$12 million.
a. How much additional external capital will be required for next year if sales
increase 15 percent? (Assume that the company is already operating at full
capacity.)
b. What will happen to external fund requirements if Landis Corporation reduces
the payout ratio, grows at a slower rate, or suffers a decline in its profit margin?
Discuss each of these separately.
c. Prepare a pro forma balance sheet for 2009 assuming that any external funds
being acquired will be in the form of notes payable. Disregard the information in
part b in answering this question (that is, use the original information and part a
in constructing your pro forma balance sheet).
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Axia College of University of Phoenix (UoP)
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 3 Solution
Assignment: Pro Forma Statements
- Resource: Ch. 4 of Foundations of Financial Management
- Due Date: Day 7 [post to the Individual forum]
- Complete the Comprehensive Problem: Landis Corporation on p. 118.
- Post the assignment as an attachment.
The Landis Corporation had 2008 sales of $100 million. The balance sheet items that
vary directly with sales and the profit margin are as follows:
Chapter 4 Financial Forecasting
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5%
Accounts receivable. . . . . . . . . . . . . . . . . . . . . . 15
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Net fixed assets . . . . . . . . . . . . . . . . . . . . . . . . . 40
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . 15
Accruals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Profit margin after taxes . . . . . . . . . . . . . . . . . . 6%
.com/bhd13e
The dividend payout rate is 50 percent of earnings, and the balance in retained earnings
at the end of 2008 was $33 million. Common stock and the company’s long-term
bonds are constant at $10 million and $5 million, respectively. Notes payable are currently
$12 million.
a. How much additional external capital will be required for next year if sales
increase 15 percent? (Assume that the company is already operating at full
capacity.)
b. What will happen to external fund requirements if Landis Corporation reduces
the payout ratio, grows at a slower rate, or suffers a decline in its profit margin?
Discuss each of these separately.
c. Prepare a pro forma balance sheet for 2009 assuming that any external funds
being acquired will be in the form of notes payable. Disregard the information in
part b in answering this question (that is, use the original information and part a
in constructing your pro forma balance sheet).
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FIN 200: Week One Solution
FIN 200
Axia College of University of Phoenix (UoP)
Foundations of Financial Management
Block Hirt Danielsen
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 1 Solution
Assignment: Cash Flow Preparation
Prepare a statement of cash flows for the Crosby Corporation
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000
Gross profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
Selling and administrative expense . . . . . . . . . . . . . . . . . . . . 420,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Statement of Retained Earnings
For the Year Ended December 31, 2008
Retained earnings, balance, January 1, 2008 . . . . . . . . . . . . . . . . . . . . $500,000
Add: Earnings available to common stockholders, 2008 . . . . . . . . . . 150,000
Deduct: Cash dividends declared and paid in 2008 . . . . . . . . . . . . . 50,000
Retained earnings, balance, December 31, 2008 . . . . . . . . . . . . . . . . . $600,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 50,000
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000 890,000
Long-term liabilities:
Bonds payable, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 120,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,010,000
Comparative Balance Sheets
For 2007 and 2008
Year-End
2007
Year-End
2008
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000 $ 100,000
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000 430,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,000 910,000
Investments (long-term securities) . . . . . . . . . . . . . . . . . . . 80,000 70,000
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,400,000
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . 1,000,000 1,150,000
Net plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,250,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
Stockholders’ equity:
Preferred stock, $100 per value . . . . . . . . . . . . . . . . . . . . . . 90,000 90,000
Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000
Capital paid in excess of par . . . . . . . . . . . . . . . . . . . . . . . . 410,000 410,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 600,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,000 1,220,000
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
28. Describe the general relationship between net income and net cash flows from
operating activities for the firm.
29. Has the buildup in plant and equipment been financed in a satisfactory manner?
Briefly discuss.
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Axia College of University of Phoenix (UoP)
Foundations of Financial Management
Block Hirt Danielsen
Introduction to Finance: Harvesting the Money Tree
Fin 200 Week 1 Solution
Assignment: Cash Flow Preparation
- Resource: Ch. 2 of Foundations of Financial Management
- Due Date: Day 7 [post to the Individual forum]
- Complete Problems 27, 28, and 29 on pp. 51-53.
- Post the assignment as an attachment.
Prepare a statement of cash flows for the Crosby Corporation
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $2,200,000
Cost of goods sold . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,300,000
Gross profits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 900,000
Selling and administrative expense . . . . . . . . . . . . . . . . . . . . 420,000
Depreciation expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 150,000
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90,000
Earnings before taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 240,000
Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 80,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Statement of Retained Earnings
For the Year Ended December 31, 2008
Retained earnings, balance, January 1, 2008 . . . . . . . . . . . . . . . . . . . . $500,000
Add: Earnings available to common stockholders, 2008 . . . . . . . . . . 150,000
Deduct: Cash dividends declared and paid in 2008 . . . . . . . . . . . . . 50,000
Retained earnings, balance, December 31, 2008 . . . . . . . . . . . . . . . . . $600,000
CROSBY CORPORATION
Income Statement
For the Year Ended December 31, 2008
Earnings after taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 160,000
Preferred stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . 10,000
Earnings available to common stockholders . . . . . . . . . . . . . $ 150,000
Common shares outstanding . . . . . . . . . . . . . . . . . . . . . . . . 120,000
Earnings per share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1.25
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 250,000 $ 440,000
Notes payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 400,000 400,000
Accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 50,000
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . 720,000 890,000
Long-term liabilities:
Bonds payable, 2012 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 70,000 120,000
Total liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 790,000 1,010,000
Comparative Balance Sheets
For 2007 and 2008
Year-End
2007
Year-End
2008
Assets
Current assets:
Cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 70,000 $ 100,000
Accounts receivable (net) . . . . . . . . . . . . . . . . . . . . . . . . . . 300,000 350,000
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 410,000 430,000
Prepaid expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50,000 30,000
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 830,000 910,000
Investments (long-term securities) . . . . . . . . . . . . . . . . . . . 80,000 70,000
Plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,000,000 2,400,000
Less: Accumulated depreciation . . . . . . . . . . . . . . . . . . . 1,000,000 1,150,000
Net plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,000,000 1,250,000
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
Stockholders’ equity:
Preferred stock, $100 per value . . . . . . . . . . . . . . . . . . . . . . 90,000 90,000
Common stock, $1 par value . . . . . . . . . . . . . . . . . . . . . . . . 120,000 120,000
Capital paid in excess of par . . . . . . . . . . . . . . . . . . . . . . . . 410,000 410,000
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 500,000 600,000
Total stockholders’ equity . . . . . . . . . . . . . . . . . . . . . . . . . 1,120,000 1,220,000
Total liabilities and stockholders’ equity . . . . . . . . . . . . . . . . . . $1,910,000 $2,230,000
28. Describe the general relationship between net income and net cash flows from
operating activities for the firm.
29. Has the buildup in plant and equipment been financed in a satisfactory manner?
Briefly discuss.
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